9 Regulatory Priorities for the Next 2 Years, from the CFPB

In our busy lives, we often focus on reacting to immediate priorities that have surfaced. However, in order to be successful in the long-term, financial institutions must also look forward and anticipate future developments. In that spirit, here are 9 priorities for the next two years identified by the CFPB. 

The Consumer Financial Protection Bureau (CFPB) recently outlined their priorities for the next 24 months.

This list is helpful, because it lets all of us in the industry look through the proverbial windshield at what is ahead.

Below is a quick overview of the CFPB’s 9 declared priorities as well as regulatory developments we're anticipating, listed alphabetically to be consistent with the CFPB’s listing:

1. Arbitration: Dispute resolution, recognizing that most lending contracts have some sort of arbitration dispute disclosure.
   • CFPB Mindset: There is widespread use of pre-dispute arbitration clauses in contracts for a variety of products. CFPB wants to regulate use of arbitration clauses.
   • View through the Windshield: CFPB will pursue rulemaking to enable consumers to pursue their rights and hold institutions accountable for unlawful conduct.
2. Consumer Reporting: This priority includes private businesses that track a consumer’s credit history, effective and efficient dispute management, and resolution processes. 
   • CFPB Mindset: The Bureau is looking to improve the accuracy of credit reporting and become more inclusive of more consumers.
   • View through the Windshield: The CFPB is considering rulemaking around furnisher and consumer reporting accuracy, dispute resolution, and related issues. The Bureau is looking to explore how alternative data can be used in the consumer reporting system.
3. Debt Collection: The CFPB is seeking better policies and processes for debt collection.
   • CFPB Mindset: They are workign to establish clear rules of the road for debt collectors.
   • View through the Windshield: The CFPB will initiate rulemaking process with the goal of creating a rule that will establish clear guidelines to ensure that debt collectors act in a consistent and fair manner, along with “rigorous supervision” of the new rules.
4. Consumer Education on Financial Issues: The CFPB wants to empower consumers to take more control of their financial lives.
   • CFPB Mindset: The CFPB wants to leverage community and public service providers to help with educational and service programs.
   • View through the Windshield:  CFPB will continue to develop tools for consumers to help with financial decisions and push consumer awareness campaigns.
5. Household Balance Sheets: The Bureau wants to understand how consumers use products and services.
   • CFPB Mindset: The CFPB envisions policymaking and consumer education to help consumers financial well-being.
   • View through the Windshield: The Bureau will initiate research to help better understand the factors that promote or inhibit the financial health of households.
6. Mortgages: The CFPB wants to make sure lenders serve the entire array of credit-worthy borrowers fairly and in a non-discriminatory manner.
   • CFPB Mindset: The CFPB continues to see the mortgage market as a top priority for consumer well-being, considering the entire cradle-to-grave borrowing lifecycle.
   • View through the Windshield: The Bureau will continue to focus on Fair Lending through enforcement programs. In addition, they will focus on ensuring that the new HMDA rule is successfully implemented. A key lever point for regulators is the HMDA data - the new data set will expand their ability to actively observe how financial institutions are operating.
7. Open-Use Credit: This priority area is focused on “lending that does not have a specific purpose like financing a car, higher education or a home.”
   • CFPB Mindset: Borrowers must be able to repay loans, even title and payday loans.
   • View through the Windshield:  Look for the Bureau to continue small-dollar rulemaking with a goal to help consumers avoid debt traps.  The Bureau will also look to cast a wider net to define a more broad group of participants in the lending market to cover a more broad set of products.  Supervisory and enforcement of open-use credit will be looking for deceptive marketing, illegal debt collection practices.
8. Small Business Lending: CFPB have access to small business data to enforce fair lending – CFPB will start exploring what types of data they can collect.
   • CFPB Mindset: The CFPB wants the ability to enforce fair lending laws through data that allows for identification of business and community needs and opportunities of women-owned, minority-owned, and small businesses.
   • View through the Windshield: The Bureau will conduct market research for small business data collection rulemaking, while continuing to examine small business lenders for compliance with Fair Lending laws. 
9. Student Lending: Student loans volumes have skyrocketed to $1.2 trillion owned by 40 million consumers. According to the CFPB, nearly half of these loan amounts are not currently in repayment.
   • CFPB Mindset: The CFPB wants to study the market, including the servicing side of student loans, and then suggest potential rulemaking.
   • View through the Windshield: The Bureau will partner with the Department of Education and other agencies will evaluate possible policy responses (lending and servicing), including potential rulemaking. The Bureau will also continue to supervise and enforce lending activity as they hold lenders and servicers accountable.

In addition to the above 9 priorities, the CFPB also acknowledges continued “Fair Lending oversight of indirect auto lenders and our rulemaking on prepaid cards.”

Many consider the CFPB the “bell cow” in today’s regulatory compliance world.  Their declaration of priorities should be important to all financial institutions, regardless of your specific regulatory agency. 

As the regulatory market rapidly evolves, it's important for compliance leadership at financial institutions to anticipate the future and be the agents of change. Looking in the rearview to things like new laws and associated regulation, formally issued guidance, and settlements can provide clear guidance about how to adjust your business practices. In comparison, the list above helps us look forward, allowing us to predict with confidence what is ahead. 

TRUPOINT Viewpoint: While it may be hard to believe, the industry has been provided a gift that allows us to peek into the future with a fair amount of clarity. We can see where the CFPB plans to steer the industry. 

As financial institutions look to develop cost efficient businesses and related compliance management programs, it helps to actively consider the regulator priorities.  Most of these quiet issues will become more important as these priorities evolve from studies to proposed rules turn to official rulemaking and supervision and enforcement.  It may serve your team well by looking out this windshield the CFPB has provided.  One thing is clear: we should hold on tight, as there appears to be a fair amount of policy and rulemaking up ahead, including prepaid, arbitration, consumer reporting, debt collection, small dollar loan, overdraft, business data collection, and student lending rulemaking.

Regardless of where these priorities take the industry, you can count on TRUPOINT Partners to help you watch the regulatory road ahead and avoid the pot holes.

• Read More:  http://files.consumerfinance.gov/f/201602_cfpb_policy-priorities-over-the-next-two-years.pdf